Find Out Just How Much Your Insurance Carrier is Padding Your Medical Plan Renewal

Calculator on spreadsheetIt’s time for your annual medical plan renewal. Your employee benefits broker and/or the insurance carrier representative sit down to deliver the news. They tell you how your medical plan is running poorly, has high utilization, and lots of large claims to justify their position. They talk about medical inflation and leveraged trend. Then they start negotiating. “What would it take for you not to shop your plan” they ask. Suddenly, miraculously, they have a lower offer on the table. You went from a 15.7% renewal to a 9.5% renewal. You don’t need to be an actuary to understand that the carrier padded the renewal knowing they were going to come down.

So what is the right renewal number to accept? Where should this risk really be priced? That’s what an actuary determines. And, that price the actuary comes up with is almost always lower than the carriers’ last offer. Without a detailed analysis you don’t know how much money you are leaving on the table.

This brings us to what should be the next obvious topic. Exactly how is any employee benefits broker negotiating effectively on your behalf with the insurance carriers when they don’t have this detailed analysis and know where the risk should be priced? The answer is they don’t. They simply shop the market and play each carrier off the other.

The insurance carriers have actuaries and so should you. Whether you have a fully insured plan or a self-insured plan with stop-loss insurance you need a 3rd party, independent actuary looking at your plan to determine where the risk should be priced before negotiations begin with the incumbent carrier and before your employee benefits broker goes out into the marketplace. Learn what else an actuary can do for you by downloading our white paper, Why an Actuary Must Be on Your Employee Benefit Broker’s Team.

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